Healthscope, Owners Seek Up to $2.4 Billion in IPO

A Healthscope Ltd. nurse preps a patient for a blood test at a Melbourne Clinic. Healthscope operates 44 hospitals including the Prince of Wales Private Hospital in Sydney and Melbourne Private Hospital, according to its website. Photographer: Carla Gottgens/Bloomberg

June 30 (Bloomberg) -- Healthscope Ltd. and its private
equity owners plan to raise as much as A$2.57 billion ($2.4
billion) in Australia’s biggest initial public offering in more
than three years.

Australia’s second-largest private hospital operator and
existing investors will sell 1.12 billion to 1.28 billion shares
at A$1.76 to A$2.29 each, Healthscope said today in a statement.
TPG Capital and Carlyle Group LP will keep a combined stake of
25 percent to 40 percent after the sale, which will give the
company a market value of as much as A$3.8 billion.

At A$2.57 billion, the Healthscope IPO would be Australia’s
biggest first-time share sale since October 2010, when rail
operator Aurizon Holdings Ltd. raised about A$4.3 billion, data
compiled by Bloomberg show. Before Healthscope’s offering,
Australian IPOs raised about A$5 billion this year, the data
show.

“Given the aging demographic, health care is a sector that
many analysts believe is going from strength to strength,” Sam
Fimis, a private client adviser at Patersons Securities Ltd.,
said by phone from Melbourne. “Investors want to park their
capital in a safe and defensive industry.”

TPG and Carlyle “explored all options” on a potential
trade sale of the business before deciding to pursue an IPO,
Healthscope managing director Robert Cooke said today on a
conference call with reporters.

Cornerstone Investors

So-called cornerstone investors have committed to buy as
much as A$1.7 billion of stock in the offering, Cooke said. The
amount of shares sold to such investors, which may include
sovereign wealth funds, will depend on the pricing of the sale,
he said.

Healthscope’s private-equity owners approached funds
including BlackRock Inc., Canada Pension Plan Investment Board
and Singaporean wealth fund GIC Pte in April about becoming
cornerstone investors in the IPO, people familiar with the
matter said at the time.

The company expects its net loss after tax to widen to
A$145.1 million in the financial year ended June 2014, from a
A$117.1 million loss a year earlier, as sales for the year rise
4.7 percent to A$2.31 billion, the according to a prospectus
posted on Healthscope’s website. It forecasts a net profit after
tax of A$147.2 million for the year ended June 2015, the
prospectus shows.

Pathology Centers

At the top of the price range, Healthscope will trade at a
three to four percent discount to larger rival Ramsay Health
Care Ltd., Healthscope’s Cooke said. The discount may be more
than 15 percent at the bottom of the range.

Healthscope will have a value including debt of as much as
A$4.68 billion after the offering. It plans to announce the
final price July 25 and start trading on the Australian Stock
Exchange on July 28, according to the prospectus.

The company, which the private equity firms bought in 2010,
operates 44 hospitals including the Prince of Wales Private
Hospital in Sydney and Melbourne Private Hospital, according to
its website. It also runs pathology centers in Australia, New
Zealand and Asia.

Macquarie Group Ltd. and UBS AG are global coordinators of
the IPO, while CIMB Group Holdings Bhd., Credit Suisse Group AG,
Goldman Sachs Group Inc. and Bank of America Corp. are joint
lead managers.

HCA Holdings Inc., the largest for-profit U.S. hospital
chain, weighed an offer for Healthscope, people familiar with
the matter said April 22. IHH Healthcare Bhd., Asia’s biggest
hospital operator, dropped its plan to bid as much as A$5
billion for Healthscope after the owners veered toward an IPO,
people familiar with the matter said earlier that month.